The corporate has persistently gone out to the market searching for yet-untapped alternatives for large-scale BESS growth, making it a primary mover in markets like ERCOT in Texas, New York ISO and extra lately MISO within the Midwest.
In addition to its penchant for planting flags in rising RTO and ISO territories others have but feared to tread in, the corporate’s profile has been raised by the customarily outspoken and candid views put ahead by co-founder Jeff Bishop.
Bishop introduced his intent to depart his submit as CEO in August final yr as the corporate introduced on-line one other 100MW in ERCOT, with the chief exec citing the necessity for a break after a relentless near-eight years on the helm.
In interviews with Power-Storage.information, Bishop was forthright in discussing the methods during which Key Seize Power (KCE) was innovating out there, akin to the event technique, and build up his workforce’s software program and asset optimisation capabilities in-house nicely forward of a lot of its opponents.
Bishop’s dedication to aiding financial growth in underserved areas of the US, in addition to his advocacy for LGBTQ+ points and variety as one of many few brazenly homosexual CEOs within the power business, was additionally undoubtedly appreciated by many.
We put Brian Hayes, successor in addition to long-time pal and former colleague of the outgoing CEO, on the spot to ask how Key Seize Power plans to go ahead and different dynamics of operating the corporate and the broader market panorama.
ESN: It was recognized for some time that Jeff Bishop was leaving, and he instructed us that his successor was somebody that he knew very nicely. You’re making one thing of a sideways transfer into the power storage sector from renewables, however what led to you taking on the place as CEO?
Earlier than I got here right here, I used to be at EDP Renewables for 18 years. For the final 12 years, I used to be on the chief committee reporting on to the CEO. I had the chance to develop with EDPR from a really small firm to what it’s right now, which is over 1,000 individuals, and about 500 individuals on my workforce.
Being within the renewable house for thus lengthy, [I was] seeing the impression the storage business can have, and the way a lot it’s wanted for renewables. Placing these two issues collectively was only a very thrilling alternative.
Solidifying that was the connection with Jeff. I knew Jeff early on in his profession, he’s accomplished extraordinarily nicely. When he went off to construct Key Seize, he was method out in entrance so far as doing that and so I’ve saved in contact with him through the years. Then, in fact, the formal course of went alongside as nicely. It lined up very nicely.
Key Seize has a robust place within the Texas market, in ERCOT. It has additionally delivered a few of the first grid-scale BESS tasks in New York, a market that has to date been fairly difficult. Then the newest matter we mentioned with Jeff Bishop was Michigan’s new power storage goal and the way the corporate is growing tasks there and within the broader MISO area. From a big-picture perspective, the place are issues right now for KCE by way of the event pipeline, which I perceive totals round 9,000MW of property at numerous phases?
One of many issues that Jeff did a superb job with, and I believe is a key tenet of success, so far as being an IPP, or a storage developer, is basically being a primary mover.
Entering into these markets early, so you may get the event property within the interconnection queue, so you’ll be able to transfer issues alongside, so that you’re there when the market develops.
We’ve accomplished that with New York ISO, we’re early entrants there, so we’re engaged on that to mature. We had been early in Texas. We had been early additionally in Michigan and South West Energy Pool (SPP), so we have now locations the place we have now positions, the place we’re preparing and shifting ahead.
Actually, the hot button is: how can we mature that pipeline and ensure we’re managing the pipeline in a constructive method, so we may be prepared when the alternatives come? The constructive factor that we’re seeing is we do see increasingly more exercise from the utilities, and others, so far as curiosity in storage. It seems to be like we’re making good bets, and we simply must proceed to make these bets as we go ahead.
Utilities, financiers ‘turning into extra snug with storage’
For KCE, the enterprise mannequin has at all times been to personal and function its BESS property. Will that proceed to be the case?
To personal and function is a particular tenet that we have now. We’re owned by SK, and so we rely on them for monetary help. However then there’s the proudly owning and working, however then there’s the monetary aspect too. We will probably be very energetic within the monetary house, so far as how we herald capital and the way we finance the tasks as we go ahead. I believe that’s the place we’d have a range of gamers and a range of issues, however so far as the property themselves, we wish to personal them; we wish to function them as we go ahead.
May you inform us somewhat bit extra about that finance piece then and the type of the kind of buyers you is perhaps in search of?
That’s the piece that we’re actually now, as we proceed to mature and because the pipeline matures.
I talked about how the utilities and everyone’s getting extra snug with storage, and there are extra alternatives. It’s the identical on the financing aspect.
Because the business matures, as contracting constructions develop into extra clear, and as income streams develop into higher understood extra simply by financiers, it makes it in order that we will have extra entry to capital throughout the several types of funds.
Whether or not that’s debt, whether or not it’s banks, whether or not it’s most well-liked fairness, the assorted various things. These are the issues that we’re specializing in now as to how we’d line up the tasks that we have now, after which what’s one of the best ways to both, firstly, go for a business technique so far as a income contract? What’s one of the best ways to do this?
Then following that up with: how does that marry up with potential buyers that might be inquisitive about tasks? These are the issues that we’ll be as we go ahead. It’s an space that continues to develop and continues to mature. It’s one thing that we recognise as an space that, for us to achieve success, and for the storage business to achieve success, we have to give attention to and have good alignment.
The income streams for the totally different state-level markets, or ISO and RTO areas within the US may be assorted: from CAISO in California the place it’s about long-term contract constructions, to ERCOT the place it’s a really service provider play, to newer markets like New York the place it’s nonetheless somewhat undefined. How do you take a look at the enterprise fashions and income streams out there in say, ERCOT versus New York ISO?
The important thing actually is that in each state, each ISO, the income mannequin is a bit totally different. You’ll be able to’t simply assume the storage income profile goes to be comparable throughout the nation, and so it’s distinctive; it requires numerous thought, numerous investigation, and understanding within the totally different markets to have the ability to work out one of the best ways to do this.
In case you examine the variations, ERCOT, the piece across the service provider market, may be very nicely developed. There are the ancillary companies income streams that they’ve, there’s an everyday power arbitrage that you’ve got. There are a number of other ways which might be very clear so far as how the market pays.
That makes it to the place there’s an excellent service provider alternative should you’re keen to take that danger, and should you’re keen to play that market. That’s one thing that we’ve made the choice to do.
We have now the working megawatts in ERCOT, and we have now a really robust market operations workforce that permits us to do this. That’s one factor the place not all storage opponents have that very same functionality. I’ll praise Jeff [on that], they had been very a lot forward so far as getting a robust market operations workforce to have the ability to interface with the market in ERCOT and understanding one of the best methods to dispatch the batteries as we go. That’s been a really constructive factor.
That’s a narrative that we’re intending to copy as we go round to the totally different markets the place it is smart as a result of as you look ahead, there’ll be some markets the place it’ll make sense to simply get a tolling settlement in place and that’s very easy.
Then there’ll be different markets like New York that has the Index Storage Credit, the place there’s going to be a element of service provider and a element of a steady income stream. These are the areas that we anticipate that we’ll be capable of function nicely in as a result of we’ve gained a really robust talent set in ERCOT, so far as find out how to work in a market, after which we’ll be capable of leverage that very same talent set, in fact, adjusting for the markets in other places.
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We should always be capable of cowl the several types of contract constructions. We may be versatile and be current the place the alternatives come up. That hyperlinks again to the event aspect, once you discuss markets, the place we must be and all these forms of issues.
My view is that we must be inserting numerous bets, and we must be throughout the nation as a result of there’s going to be totally different alternatives in other places, whether or not that’s for utilities, whether or not it’s for co-ops, or whether or not it’s probably for business and industrial prospects.
In order the markets mature, these alternatives will come. We must be on the market and go from there.
‘Putting bets’ throughout a balanced and diversified portfolio
Lately, Gore Road Capital, a UK-headquartered investor-developer, stated that its various portfolio, with tasks within the UK, Eire, Texas, and Germany, was what enabled it to outperform some opponents that solely targeted on property within the UK as that market went by means of a comparatively low income interval. Is it additionally a part of the KCE playbook to not simply seize the totally different alternatives, but additionally to unfold danger throughout a diversified BESS portfolio?
For certain. I’m a giant believer in diversification. It’s not dissimilar from after I was at EDPR, we targeted on markets all throughout the nation. I believe it’s a really prudent method for a renewable participant or for a storage participant in our case to maneuver ahead so far as to have diversification, as a result of it’s the one factor that we do have to recollect: the storage business is new, and guidelines are nonetheless being outlined, and rules are nonetheless coming by means of.
Issues can change. Because of this, you wish to have a balanced portfolio, so you’ll be able to transfer round.
What do you assume are going to be priorities for KCE and for the business for this yr?
For this yr, the important thing focus areas are that we have now two tasks which might be beneath development which might be coming on-line in the summertime in Texas (KCE TX10 and KCE TX15). So, the precedence is to get these tasks delivered, after which simply give attention to execution.
I simply got here right here, and so I’ve my very own fashion, and my very own methods of how I anticipate and wish the corporate to work. So lots of this yr is basically simply getting all of our geese in a row and specializing in execution and ensuring that as an organization, we’re all type of working as one unit shifting ahead.